Time for Govt. to appoint NCLT Members & NCLAT chief: Justice (Retd.) M.M. Kumar

Thursday, July 15, 2021

New Delhi, 15th July 2021:
The Government should implement capacity building measures and ensure efficient, quick appointments of National Company Law Tribunal (NCLT) members together with appointment of the president and chairman of National Company Law Appellate Tribunal (NCLAT), Justice (Retd.) M.M. Kumar, past-president, NCLT said at an ASSOCHAM virtual summit today.
“NCLT is a specialised tribunal, it has Companies Act and IBC (Insolvency and Bankruptcy Code), these specialist tribunals are required to be very well equipped and should be in a position to dispose of more cases,” said Justice Kumar addressing the first session of an ASSOCHAM series of National E-Summit on IBC and Valuation.
Justice Kumar further said, “Data of NCLT is not very encouraging, 750-800 cases are disposed of. Now the time has come for the government to take up these issues.”
He said that while the number of liquidation cases is staggering, but when one starts analysing it is seen that large number of liquidation cases are those which are coming from erstwhile SICA (Sick Industrial Companies Act) or very old cases transferred from the HCs. “That number should not worry us.”
He however said that haircut being imposed is a worrying process. “There are write-ups in newspapers and journals that cartels are operating, and professionals are not doing their job properly and all sorts of things are being said out in the open. That aspect that how it can be clubbed, needs to be seen.”
Talking about the need to revamp the valuation system, Justice Kumar said, “I think professional bodies IRP, RPs, CAs are doing a very good job, I think there needs to be some revamping of the valuation system. IBBI (Insolvency and Bankruptcy Board of India) made large number of attempts. Our law is very old in so far as in terms of valuation of intangible assets, non-financial assets, and contingent claims.”
He informed that IBBI is trying to build up whole regime of valuers, bringing them under one umbrella, some association was also being formed and valuers are being given special training.
On liquidation period he said, “Ease of Doing business is the banner, under that they cannot show to the world at large that we take two years for liquidation. Therefore, if there is no efficient target fixed in law, there is a likelihood of being even more lazy.”
He also said that Section 128 of Indian Contract Act should be used more and more to write the guarantee agreement properly. “It is a very interesting section which says that liability of a guarantor is co-extensive with the principal borrower and in the contract of guarantee, a stipulation can be added that first the creditor will exhaust all the remedies against the corporate debtor, the principal borrower then he can resort to the personal guarantor.”
He further said that the government should do something to protect the entrepreneurs who have faced the Corporate Insolvency Resolution Process (CIRP).
“IBC has no doubt created financial discipline, but it has also created a feeling of alienation that can be assuage by the government by bringing a scheme to rehabilitate those who have been adversely affected,” said Justice Kumar.
He added, “Today the position is, entrepreneurs who have gone under CIRP or liquidation are not given loans, they are ineligible. Those people are in dismay, there might be some mechanism by which they might not be allowed to come back for a year or two but after some time they should be allowed to return as they are quite skilful and are national assets and their skills may be used to advance the financial discipline in the country, to enhance the economy of the country.”
Amid others who addressed the ASSOCHAM summit included - Mr Anil Goel, Member, ASSOCHAM and Founder & Chairman, AAA Insolvency Professional LLP; Mr Nitesh Jain, Director, CRISIL Ratings Ltd.; Ms Jyoti A. Singh, Founder, AJA Legal and Associates; Mr Ankur Shrivastava, Managing Partner, EZY Laws; Mr Sutanu Sinha, Partner (Business Restructuring-Deal Advisory Services), BDO India; Ms Pooja Mahajan, Managing Partner, Chandhiok & Mahajan Advocates and Solicitors; Ms Anju Agarwal, Partner, ASC Group and Mr Sahil Narula, Partner, RNC Valuecon LLP.
ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org
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